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Royal Bank of Canada Steps Away from Tar Sands With Support for First Nation Rights

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Top financier of tar sands announces new environmental and social standards

Wednesday, December 22, 2010

SAN FRANCISCO—The Royal Bank of Canada (RBC) today made public its new environmental and social standards, which will govern financing of clients in high-impact sectors including Canada’s tar sands. The announcement marks a significant about face on tar sands by one of the sectors biggest financiers. The policy is the first by a major international bank to document whether bank clients have received consent from Indigenous communities. This follows nearly two years of campaigning by Rainforest Action Network (RAN) alongside First Nations concerned about the negative impacts of tar sands development.

Just week’s after Canada signed on to the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), RBC’s policy breaks significant new ground among international banks with its handling of Indigenous rights. For bank clients in high-impact sectors, including the tar sands, the policy guides bankers to document where client activities impact Indigenous communities and the status of consultation with those communities. Bankers will have to examine whether clients have “policies and processes consistent with the standard of Free, Prior and Informed Consent.”

“With RBC’s new policy, the banking giant has made a promise to take responsibility for its financing in the tar sands and to uphold the rights of First Nations. We commend the bank for its new commitment, and look forward to seeing policy put into practice,” said Brant Olson, campaign director for the Rainforest Action Network. “RBC is raising the bar for the financial sector and signaling to oil and gas corporations that it is time to take environmental and human rights seriously.”

RBC’s new policy will impact a range of companies operating in the oil and gas industry. The policy will instruct bankers to prepare an Environmental and Social Risk Review Report on all clients, and review whether clients are complying with new environmental and human rights standards. Senior bank executives will review these reports and decide how the bank should respond to any possible deficiencies.

In the coming months, RAN will be monitoring RBC’s transactions to assess the impacts of its new policy. The first test for RBC will be with the highly controversial Enbridge Northern Gateway Pipeline, the largest crude-oil pipeline expansion in North America. Two weeks ago, 61 First Nations declared unified opposition to the pipeline, which would carry more than half a million barrels of tar sands oil per day through the heart of the Great Bear Rainforest and the territory of 20 First Nations. The strength of RBC’s policy will be measured when Calgary-based oil giant Enbridge goes to the bond market to finance the $5.5 billion project.

“We are happy to see RBC recognize the rights of Indigenous peoples with its new policy,” said Clayton Thomas Muller, Tar Sands Campaigner for Indigenous Environmental Network. “We hope to see these new policies move RBC away from financing corporations like Enbridge that continue to violate Indigenous peoples rights and the environment.”

RBC’s policy comes after almost two years of consistent pressure from the Rainforest Action Network, which pushed the bank to phase out financing of tar sands projects and to require RBC clients to secure “free, prior and informed consent” from First Nations on all corporate projects. The group led a 150-person demonstration at the RBC Annual General Shareholder meeting last February and a high profile poster campaign targeting CEO Gord Nixon’s wife as well as intense negotiations with bank representatives.